A Year of Embezzlers, Closures, USPS Woes –Michelson

Santa won’t be scaling any prison fences this holiday season in an attempt to deliver presents to former printing industry employees now serving sentences for bilking hundreds of thousands, and even millions, of dollars from their former employers. Although these convicted criminals may have been living large before their scams were finally detected during 2011—fancy vacations, big-ticket purchases and, in one over-the-top case, even an illegal $30,000 wire transfer to Sotheby’s for cases of fine wine—their day of reckoning eventually came. But, not before exacting a heavy financial and emotional toll on their employers, the job security of their co-workers, let alone the repercussions on their own families.

Fraud and embezzlement undoubtedly dates back long before Johannes Gutenberg invented the concept of movable type printing, but it sure seems that 2011 will be remembered as a year when so many theft cases in the graphic arts industry came to light. Perhaps these “white-collar” crimes can be chalked up to just another sign of our hard economic times but, more importantly, they should serve as reminders to printing business owners, managers and even rank-and-file workers to keep a watchful eye. Too often, by the time an embezzlement is discovered, restitution is minimal at best. The only solace left is knowing the perpetrator will serve time behind bars—although typically well below the sentences given to those who commit drug-related or other offenses.

Likewise, we reported on numerous printing plant closures throughout the year. Quad/Graphics, ranked as North America’s second largest printer on the Printing Impressions 400, likely led the downsizing charge, albeit not unexpectedly. Quad spent much of 2011 digesting its 2010 mega-acquisition of Worldcolor (Quebecor) in an attempt to better align its overall output capacity with market demands. RR Donnelley—Quad/Graphics’ even larger rival and listed #1 on the 2011 Top 400—also downsized its commercial printing operations, but it did make acquisitions during the year to further diversify into packaging and to enhance its CustomPoint Solutions Group, which provides content creation, management and delivery solutions. Unfortunately for publicly held RR Donnelley and Quad, though, their stock valuations have taken a beating on Wall Street—despite the much-needed, 80,000+ combined jobs that they provide to Americans on Main Street. Privately held Vertis, ranked at #7, was able to recapitalize its debt through a prepackaged Chapter 11 bankruptcy. And noted industry consolidator Consolidated Graphics (#8) slowed its M&A thrust in 2011, only seeking stronger, well-positioned companies that could add value to its portfolio. The aforementioned industry behemoths may have captured the bigger headlines, but the bevy of closures, tuck-in acquisitions and distress mergers that occurred among family-owned, smaller printers this year better represents the true “core” of our industry.